Today’s scenario is very unlike the plunge during the Financial Crisis, which blew over in no time.

Semiconductor sales have plunged about 22% from the peak last October. That peak was the end of a long spike that started in 2017. When you look at the chart, you see the surge in semiconductor sales that lasted for a year and a half. And then it’s just a straight line down essentially, back to July 2017 levels. And semiconductor sales have been stuck at these levels now for five months. Compare that to the 39% plunge during the financial crisis.

During the financial crisis, semiconductor sales fell off a cliff within a few months, and then bounced off instantly. It’s a perfectly V-shaped recovery. And a few months later they were back up. So this was just a disturbance in financial confidence, when you think your bank might not be open tomorrow, you’re going cancel your orders and see what happens. And once people figured out that’s not what was going to happen, things sort of went back to normal in terms of semiconductor sales.

But this time around, there is no sign of a V-shaped recovery. This time around, it has been five months in a row at these low levels, after plunging this far and very suddenly. So it’s a very different scenario. This is not a confidence-type scenario. There are some real issues there.

Semiconductors go into everything. If you’re buying a hairdryer today, there’s a chip in it. And if you’re buying toaster, it has a chip in it. A lot of products have a lot of different chips in them. And among the products that have the most ships are cars. They have chips that govern everything, the whole engine management system, automatic transmission, the emission control system. You have the common little things like power windows whose motors and buttons are governed by chips. And there are specialty manufacturers that make those chips.

Now, car sales are a big part of global business, and they have plunged in China, the largest market. They’re down 12% in China year-over-year. They’re down in the US for the third year in a row, not by much, by a couple of percentage points a year, but it’s the third year of declines.

In India, the fifth largest market, vehicle sales have plunged by 25% because they have a shadow-banking financial crisis going on. The shadow banks are heavy into financing vehicles, and that system is now very vulnerable. So auto sales just collapsed in India.

And in Europe, auto sales are down about 3% year over year. In Canada, auto sales are down 5.5% year over year. So it’s global.

And this has an impact on component makers and on everybody in the industry and therefore on semiconductors. It’s a phenomenon that started in a major way late last year when vehicle sales in China started heading south in a very hard manner. In India, it started this year. In Europe, it’s been going on for a while. In the US, it has been three years. So this is unrelated to the trade wars. It’s just a maturing market globally that has its own problems that are not going to get resolved any time soon.

Another place where chips are used heavily, and there are a lot of products out there: smartphones. Smartphone sales globally are now on the decline. Last year, they were stagnating. It’s a maturing business. This year, they’re in decline. In the EU by 5%, in North America by 4%, in Japan by over 6%. These are pretty big declines. And in China too. So in that take some of the demand for chips off the table.

PCs and laptops are a big destination for chips. The first quarter, sales were down. In the second quarter, sales ticked up a little bit, and now we’ve got Microsoft’s Windows 7 going out. So there’s an upgrade cycle going on, and so PC and laptop sales will likely be pretty decent for the rest of this year.

Global IT spending for hardware is also down and is expected to fall further. Software spending is good, but hardware spending isn’t, and it is hardware that chips go into.

And in 2018, the crypto-mining industry got hit hard. The crypto-boom collapsed, and crypto-miners cut back and stopped buying the crypto-mining rigs, the special computers with powerful chips designed to mine cryptocurrency. So they overproduced chips for these crypto-mining rigs, and there was a huge pile of inventory of these chips and rigs out there, and demand for them just collapsed.

But then there’s the China-US trade-war debacle. Huawei is a big buyer of chips, and the export controls were aimed at that company. But in anticipation of these tariffs and export controls, Huawei and other companies on both sides of the Pacific, so in the United States and in China, stocked up on products trying to front-run the tariffs and export controls.

Huawei, for example, stocked up to one year’s worth of chips and other essential component ahead of time so that when the export controls hit, it wouldn’t run out of components.

By late 2018, that buying to increase stocks slowed down, as some of the tariffs and export controls hit. And these companies are now trying to whittle down their inventories. In the US, it’s the same thing. Our warehouses are just packed-full. And these goods are things that have semiconductors in them. But the strategy to stock goods in order to front-run potential tariffs has now run its course. And it was in part this front-run operation that caused the spike in semiconductor sales last year, and this spike is being unwound now.

So that’s not a collapse of the economy. We have some structural issues, with cellphone sales declining, and auto sales declining globally, and some other tech product sales declining. But then we also had the spike in sales last year caused by the efforts to front-run the tariffs that is now being unwound.

Chips are a good indicator of what’s going on in the goods-producing economy. We’ve seen the weakness in other parts, for example in the transportation sector. There are really fat inventories leading to a fairly significant weakness in current sales by manufacturers. And chip sales are an exaggerated measure of that.

Suddenly – I mean the signs had been everywhere for a long time and “suddenly” doesn’t really apply – the whole house of cards came tumbling down. Read…Is the Everything Bubble Ripe Yet?

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Inflation has finally caught up to everyone as politicians keep increasing taxes on a tapped out society.

InTheSticks

Aug 11, 2019 at 1:08 pm

Joe NAILS it in one sentence. I watch the collector revolver market. (They don’t make a chart for that!) Even with every politician screaming take away their guns it’s on life support. People are out of money and scared.

alex in San Jose AKA Digital Detroit

Aug 12, 2019 at 1:47 am

interesting! Because I’d assume collectible guns would be a very sound investment. I believe cheapie Lugers were still a thing when I was a teen. They’re sure not now!

char

Aug 12, 2019 at 8:35 pm

Problem with collectibles is fashion. If something is IN prices rice and people enter the market. When it is OUT prices fall and speculators leave the market

NBay

Aug 11, 2019 at 3:11 pm

“Everyone”?

Why aren’t they increasing taxes (even the obviously evil DEATH taxes) on the far less “tapped out” members of “society”.

Nat

Aug 11, 2019 at 7:30 pm

“as politicians keep increasing taxes on a tapped out society.”

Which society are you talking about? In the US tax rates have mostly gotten lower since at least the 80s (minus some locals with high state and city taxes).

Jim Shea

Aug 11, 2019 at 7:38 pm

Big increases locally (real estate and school taxes)

NBay

Aug 11, 2019 at 8:59 pm

Our “Constitution” was written for a nation of Indian killing farmers, big landowners, and independent merchants. Seems totally FUBAR now.
Maybe it’s time for a C.Convention? I kinda dig Parliament system (not knowing much about it’s rules), but more parties seems ok, and the Brit action makes for better TV. Besides, I really dig that laid back Speaker, he is COOL.

envo

Aug 10, 2019 at 10:17 pm

Since the GFC we have seen dips in PMIs, stock markets, auto sales etc… But the central banks stepped on the gas and the markets recovered.

This time something seems to be different. Germany has been foundering for nearly have a year now. China seems unable to turn things around

So many dangerously negative signals.

Have we reached the pushing on a string moment?

Are we Wile Coyote hanging in mid air over the cliff?

Is this where when something cannot go on – stops?

Central banks are hacking rates down on a regular basis now.

NZ is supposedly ‘getting ahead of the curve’ with a big cut.

If the signals continue to be negative, watch for a series of ever more desperate cuts. If that happens then I think we will know the end game is very near.

When the players smell desperation in the air, the effect of rate cuts will be the opposite of what is intended.

Instead of seeing opportunity the big money will surge into safety as panic sets in.

Then we will get GFC as in Global Financial COLLAPSE.

bungee

Aug 10, 2019 at 10:39 pm

Goodbye windows 7. I don’t know what im going to do without you

Davebee

Aug 10, 2019 at 10:58 pm

Fear no more Bungee, replace your Windows 7 with Android 7 or even Linux, stand up to the Gates crew and their usual scare mongering hoss manure. In any case unless you are a heavy data user I doubt that much will happen if you just kept on with that Windows 7 OS.
I know of several people/small firms who are STILL on XP and they are doing just fine, thank you very much.

Brant Lee

Aug 11, 2019 at 7:11 am

I’ve bought my last Windows. I ask myself why do I need all this junk going on in the background to work on the web? Yesterday my laptop shut down for over five hours to update because I hit the wrong timing button. I still get sudden pop-up screens to buy Norton to protect Windows…I need something to protect me from Windows.

medial axis

Aug 11, 2019 at 10:14 am

Try linux Mint. It’s aimed at windows users.

bungee

Aug 11, 2019 at 6:13 pm

Brant Lee,
I have “never10” which keeps windows10 from getting in and spreading its filth. Im pretty sure I put one on to protect me from Norton way back when. I’ve got all kinds of blockers and everything has been flawless for years and while i appreciate the wise input about just staying with 7, im against using deprecated systems. Linux could be cool, Davebee and medial axis… but it’s my office and so everyone has to re-learn. One guy is an old man that might not make the switch…such is life.
Most of my software is illegal (it honestly just works better that way) or in-house custom. Ive got my own little world. Switching os is a big deal but better than having to do it in a panic as third parties start requiring something newer. We work for the machines now and theyre real buncha slavedrivers.

B. Kold

Aug 10, 2019 at 11:09 pm

LOL. Beat me to it.

stan6565

Aug 11, 2019 at 2:00 pm

We have about 15 workstations in our offices. All on windows 7 professional. All were last updated from MS about 6 months ago and the updates are now shut off. All master drives had been cloned in three copies. Only antivirus software is allowed to update the definitions and all users are prevented by strict permissions policy to update anything that can affect workstations, data servers, printers and other peripherals. Drafting, designing and FEM packages no longer update.

I hope this gives us some 10 years of free computing life until the ongoing spying intruding stalking and voyeristic industry models collapse due to lack of victims, currently enthusiastically willing to be virtually raped and happily paying for the privilege of doing so.

And if 10 years hence the situation is no better then just sod it I will be swapping my business for a boat of sorts anyway, to simply drift away.

Rowen

Aug 10, 2019 at 11:15 pm

When i went to college in 1995, electronics that i brought: tv, vcr, computer, monitor, printer, telephone, answering machine, stereo system, calculator, alarm clock

when my nephew went to college in 2018, electronics that he brought: cell phone and tablet.

Gandalf

Aug 11, 2019 at 12:12 am

Rowen,
Yes and behind that simple cellphone and tablet? An unimaginably massive electronics infrastructure to support EVERY. SINGLE. APP. on those two devices.

A brief list:
Cellphone towers and networks for data transmission, with faster speeds and standards requiring new electronic networks every 5-10 years
Google, with its protean array of functions, from GPS tracking of that cellphone when you use Google maps, to its original web crawling functions, now monetized by computerized advertising and tracking
Facebook, Amazon, Netflix, Spotify, etc. even Uber/Lyft have massive electronic infrastructures to deliver their product.
And, if you use any Cloud storage (even simple email requires Cloud storage), there are massive data centers to store all that information

Apart from the camera/video and the alarm clock functions and any stored media files on that phone and tablet, every other function requires a gigantic electronics support network to provide that function

We have not reached the end of possibilities for what that cellphone and laptop can do.

NBay

Aug 11, 2019 at 9:27 pm

In ’65 in the Engr building it was slide rules (circular was extra cool and cost more) and about 15 mechanical calculators in one room. Some people snuck in when room was empty and made them all divide by zero…..got pretty noisy and often ran quite a while.

Gandalf

Aug 10, 2019 at 11:45 pm

I’m seeing a different trend in that graph. A huge spike starting in 2017, probably related to the bitcoin madness, and to stockpiling for Trump’s trade war, and now a return to normal. Normal is still upward growth because….

If you draw a straight line from the current numbers to what they were just before the spike started in 2017, the slope of that line is still upwards and continues at the same upward slope from the previous decade of growth.

My conclusion: Semiconductor growth is continuing, they go into everything now. Almost every new technology that comes along requires electronic controllers and computing power, minicomputers and semiconductors. They are what “Plastics” were in the 1960s

Dave Chapman

Aug 11, 2019 at 1:59 am

Gandalf,
I agree with your reading of the chart. What I see is that current sales are on trend, and that we had a big upward spike in 2018.

That spike was likely due to Chinese stockpiling of cell phone chips, memory chips, and SOCs, in anticipation of an ugly trade problem.

It does not look like an early symptom of a recession. Of course, we already have lots of recession signs from the banks and the bond market. . .

CreditGB

Aug 11, 2019 at 10:51 am

I started a chip firm 2 years ago at an undisclosed location. I employ thousands and now sell billions of dollars worth of chips each month.

AND I DON’T BELONG TO A CHIP INDUSTRY GROUP OR REPORT MY SALES!!

Of course this is all BS, I couldn’t do this, but hey is there someone out there who can?

Just wondering…

roddy6667

Aug 11, 2019 at 7:57 pm

I see today’s numbers as normal, also. Reversion to the mean, nothing else.

Reversion to the mean is a very painful thing — think about housing bubbles. No one wants reversion to the mean. But of course, that’s what we get.

J.M.Keynes

Aug 11, 2019 at 2:57 am

– It’s the same /a similar mechanism that plunged the US into a recession in the early 1970s. It was the worst recession in the history of the US since the 1930s.

Joe

Aug 11, 2019 at 4:36 am

In the early 70’s my Dad bought a farm 280 acres with house and barn for $25,000 and making $18/hr at a pulp and paper plant.

Joe

Aug 11, 2019 at 4:47 am

I remember to how the company was contributing to Canada savings bonds and it was taken off the pay. He did $10,000 each year for the last 3 years before retiring early due to the massive automation taking effect.

Paulo

Aug 11, 2019 at 1:23 pm

$18 early 70s? In BC, highly unionized, I made $4.55 at an M&B union sawmill, IWA (1973), and pulp mill jobs were just a few cents per hour more. I didn’t work at the pulp mill because of the lousy shifts and smell.

The date of the $18 per hour must be off by a decade, anyway.

In ’75 I made $7.00/hour union 3rd year carpenter apprentice. Journeyman rate was $9.65 that year.

One of my best friends stayed at the Crofton mill for almost 40 years, ended up as a 1st class steam engineer and ran a steam plant as a shift engineer. When he retired, being management, he was screwed out of his pension…..the union guys were protected by contract/law and the company (new owners) couldn’t touch the hourly employees pension assets.

Welcome to the last decade of the 1% entitlements; other people’s money and savings. No wonder the economy is in the toilet.

Joe

Aug 11, 2019 at 2:45 pm

Your right. He was making that at middle eighties when he retired at 55 years of age. Worked 35 years at the same company when they were still using horses. The farm was bought in the early 70’s. Sold his cabin on the river for $16,000 and bought that farm.
Town lost 1200 jobs when the plant automated. Population dropped from 12,000 to 4,500 today.

NBay

Aug 11, 2019 at 10:13 pm

Just dug out old pay stub from 1000+ employee very hi-tech company. Likely the world leader in field, as we set up another plant in Ireland. Non Union. Sick days and vacation days accumulated by years employed, no pension. Was lowest level ETech in maint.
5/17/69….38.7 hrs….charity…$.60…..net pay $83.38…OCLInc.
Lived in sin with first wife, $110/mo largish two bed room apt with small fenced private enough to sin grass back yard.
No shot at that exact same apt for that close to min wage couple today. Cost Plus (SF) decor and very upper middle class 2nd hand living room set in perfect shape. (her find). Anyway,
This time IS different.

alex in San Jose AKA Digital Detroit

Aug 12, 2019 at 1:52 am

“sin grass” is the best name for marijuana I’ve heard since “the Devil’s lettuce”.

NBay

Aug 11, 2019 at 1:25 pm

I think “double “80’s recession” destroyed far more working lives, and many for good, especially with the legal landscape afterwards.
I barely made it out.

Proof is it started big time deficit spending to “save” us…..sound familiar to today?

David Hall

Aug 11, 2019 at 7:53 am

England recorded a quarter of negative GDP growth. London real estate was overbought.

China built 50 empty cities they can not rent out. Not a time to go on a shopping binge.

Apple raised the price of an iPhone faster than wage increases. No need to upgrade.

Cashboy

Aug 11, 2019 at 3:28 pm

David Hall: “Not a time to go on a shopping binge.”

But I am not sure if it is wise to keep cash in a Thai bank in Swiss Francs at the moment.
I am not sure if cash in a bank is safe anymore.

I am inclined to buy farm land in Thailand and some farm equipment for self preservation.

JM

Aug 11, 2019 at 8:45 pm

@Cashboy

Maybe take cash on safe is the best.

Bad idea to buy agricultural land in Thailand when you don’t put your name on it.

Baths is a strong currency now and the Thailand not have hug debt only 40 % PIB.

Unamused

Aug 11, 2019 at 7:56 am

Information technologies, and underlying technologies like semiconductors, have long since matured. The largest benefits and financial returns, from the best ways to apply these technologies, have already been harvested. The laws of diminishing returns applies: the more you put into into it, the less you get out of it, until at last you pass the point where you get nothing and start losing, not gaining, from further investment.

In the desire to try to keep up the momentum, the application these technologies has necessarily had to move from communication and automation into areas where they are far less profitable and, increasingly, genuinely inappropriate. Many products are not at all improved by putting chips and software into them, but they can be made more expensive, which keeps the profits coming.

For the most part these ‘improvements’ are only good for the uses of data collection in marketing and surveillance, which have no real benefit to consumers but do enhance financial extraction and mass control. Nevertheless, people are easily suckered into buying into gimmicks and fads. And for those who are not, they have Windows 10, and they don’t give you a lot of choice, and that’s by design. In time, all the normal activities of modern life will have to be done through computing devices over which you have little real control, because their purpose is to control you.

Between digitisation, financialisation, and corporate domination of governments at all levels, the net result is that you now have an economy that’s supposedly expanding smartly while the well-being and financial security of most people are collapsing. And these will continue to collapse.

Gross Domestic Product (GDP) and other metrics of economic activity don’t measure either broad-based prosperity or well-being. That’s also by design. Under the hood of “recovery” and a higher GDP, life has gotten harder and more insecure for the bottom 90%.

The costs of the financial anxiety provoked by huge insurance deductibles, staggering healthcare bills, and debt of all kinds continue to increase. The family home remains the mainstay of middle-class wealth, but its value is now determined by credit bubbles and busts. In the pre-financialization era, house prices tended to rise by a modest percentage over time, more or less the equivalent of a savings account drawing interest as the homeowner paid down the principal and accrued equity. But now every homeowner has been transformed into a gambler who must time the market swings when buying or selling, and one mistake can wipe out decades of paper gains. Households playing it safe are punished with near-zero or negative returns

Everyone with their retirement savings in a 401K or IRA is also now a gambler whether they accept that reality or not. This happy story of the wunnerful benefits of turning everything into a tradable market is not what actually happened. What actually happened is that the new markets were quickly dominated by monopolies and cartels, and previously safe assets were financialized and securitized, in effect stripmining the unwary of their income and assets.

Alexa and Siri won’t change that, but they will keep people busy while they’re being robbed, and they will abet the robbery. That’s what they’re for.

How will people cope? It is easy to see Borg implants and soma in your futures, because it is already happening, and it is accelerating. These technologies will serve the people, who will be persuaded that they are happy, and they will be controlled, and their residual value easily squeezed out, and at the last they will be easily disposable, because most people are obviously more trouble than they’re worth, which won’t be much.

Joe

Aug 11, 2019 at 8:09 am

Since most devices today require the internet…
I dont see it being on much longer.
Companies don’t do to well in the maintenance department, aged infrastructures and massive debt by cellphone providers.
Soon too will be the space debris problem for satellites.

RD Blakeslee

Aug 11, 2019 at 8:16 am

There are whole communities (whole, in several senses of that word) who simply eschew all this.

Mennonites, for example, which is not to say they won’t be buried in humanity’s final landslide.

Unamused

Aug 11, 2019 at 8:41 am

Some of us heeded Thoreau’s warning against become the tools of our tools.

We made struedel today. No digitisation needed. Our hydrogen-powered Bentley has only analog devices. No digitisation needed. We’re off for a hike on the hills. No digitisation needed.

I suppose chips are all right in their place. The problem is that the damn things won’t stay there.

Paulo

Aug 11, 2019 at 1:53 pm

@RD
We don’t have cell coverage where I live and we consider ourselves very lucky. I spent all day Friday setting up an EOC, (Emergency Operations Centre) which I lease (the site) to our Regional District for $1 per year. I also built the building. If the big one hits, or we are cut off by fire…the first thing to go is cell coverage and landlines, hydro…plus the highway. Our communication is by HF radio, and we can transmit data/text using the HF freqs as carriers as opposed to using the internet. Last year, during BC’s massive forest fires, many many communities were cut off and had no way to communicate with outside agencies trying to help. The ‘authorities’ were reduced to dropping off satt phones by helicopter and showing one or two people how to use them. Satt phone is very poor coverage and you can only transmit voice, not text or data.

Anyway, after the antenna array was finally set up we talked (crystal clear) with folks from Haida Guai, Vancouver, Okanagon, even down in Olympia WA. We exchanged email texts via HF. Sometimes, old ways, tried and true, are superior. The entire system can run on batts or my generator should there be a power failure.

This is being implemented all across Canada, and our site is one of the first so it’s pretty fun to see everything work to plan and design. 99% is volunteer.

Gandalf

Aug 11, 2019 at 8:00 pm

Paulo,
I don’t know if you realize that very high power transistors are at the heart of every RF transmission tower in the communications spectrum, from ham radio to VHF and UHF TV and cellphones. And on the receiving end, there’s tons of semiconductors as well
So this “old way of doing things” is still part of the modern global semiconductor industry.

50 years ago, high power amplifier technology was one of the very LAST bastions where vacuum tube amplifiers still dominated because nobody had yet figured out how to pump 50,000 watts of power through a semiconductor.

So, your network and future such networks are indeed part of the continued steady growth of the worldwide semiconductor industry even though you consider it an “old way of doing things”

NBay

Aug 12, 2019 at 3:12 pm

Gandalf,
Yeah. Bought regular from Digikey catalogs mid 80’s mid 90’s +. Amazed at how power levels of every device just kept going up and up and up….espec triacs…(for motor power)…..and prices down, down…Malaysia 555’s….7000 series.
PS: I know what a screen grid is and does..Big stations (KGO) could crank it up to 75KW at nite…was listening to Ray Talyafero(sp?) on Nebraska I-80 in 71-72, while wife slept in back.

lisa

Aug 11, 2019 at 9:51 am

WELL PUT! GREAT SUM!

Dale

Aug 11, 2019 at 11:44 am

@Unamused: Well stated.

There is still some hope re control of your workstation, in that Linux is (or can be) completely transparent and configured to work for you instead of somebody else.

There are even custom ROMs for your Android devices, but you have to root them first which is not a great idea as Google has proven to be able to protect users from most threats other than Google. But if somebody really wants control of their mobile device and doesn’t mind some inconveniences (including possibly bricking the device) there are some ideas at [search] “crunchdroid best-custom-roms-android-phones” (Note I haven’t done this for years for the reasons stated.)

ZeroBrain

Aug 12, 2019 at 1:47 am

Even with Linux, you don’t fully control what’s running. You’re probably aware of the Intel Management Engine running proprietary firmware – who knows what backdoors exist. The BIOS (written in China) can also do whatever it wants with your OS none the wiser.

NBay

Aug 11, 2019 at 1:31 pm

Alexa, respond to Unamused comment for me, and add I don’t feel like reading/thinking yet this morning.

NBay

Aug 11, 2019 at 3:20 pm

Actually, I’m into biofilms at NIH PubMed…..”you are what you eat” seems to have ever increasing weight, (and seems to be easier reading for me than finance stuff at the moment).

alex in San Jose AKA Digital Detroit

Aug 12, 2019 at 2:11 am

NBay – I try not to get into nutritional belief systems too much but one thing interesting I read recently is that a lot of processed foods have emulsifiers in them that we did not evolve with, and those might be messing up our gut environment.

Of all the diets I see bandied about, even the low-carb one I follow, the common factor seems to be (a) more fiber and (b) at least modestly increasing exercise.

NBay

Aug 12, 2019 at 4:45 pm

Alex,
NEVER read one single nutrition book or followed ANY fad diet. (and very few other social fads…have trouble fitting in) Deciding for myself from evolution, anthropology and original basic molecular level research, from cells, to cell interactions in whole organisms. (think Pauling still made good point, so I take 1000mg of that plus a multi vit….our double vit C/uric acid knockout still needs more study/data). Big Pharma has $$$$ infiltrated, so have to watch out even at NIH-PubMed
Agree with your a and b 100%, plus I would add (c) no excessive body fat. F all that adult onset diabetes…what a money maker! Emulsifiers? Haven’t paid much attention to them or anyone yelling about them, sorry. Most seem kinda bio-inert. But if I’m all wet, then I pay for it.
But who knows where ALL food/supplements really come from, anyway? The grocery store is where the trail stops stone COLD.

Unamused

Aug 11, 2019 at 8:30 am

Semiconductors go into everything. If you’re buying a hairdryer today, there’s a chip in it. And if you’re buying toaster, it has a chip in it. A lot of products have a lot of different chips in them.

You don’t actually need a hairdryer, or a toaster, or a clock, or a lamp, or a shoe, or a baseball glove with a chip in it.

But they do.

WhatAboutTheCloud

Aug 11, 2019 at 9:02 am

II work at a rather large tech company that has datacenters all over the world, but due to the inefficiencies and costs inherent in running private datacenters my company is switching, slowly, to the cloud. This is a common phenomenon and will continue for all companies. One of the things AWS brings into play is very efficient use of hardware, and I’d think that as companies use AWS/GCP/AZURE rather than private datacenters the net processor sales must suffer. E.g. with private datacenters a company is $100 for processors and utilizing them at a 20% rate, post-cloud-migration they’ll be spending $50 to AWS and they’re only spending $20 on the processors, so the net spend on processors must be quite a bit lower overall as this trend continues.

GSH

Aug 11, 2019 at 11:25 am

Just make sure your IT bosses do understand that there will be dozens of data center techs that do not work for them but will have full access to your company’s data. For some data that is fine, for other data it is not.

Just Some Random Guy

Aug 11, 2019 at 6:18 pm

Or you could have one of your employees have access to your data, like say, oh I dunno, Capital One. People are people. Some will be bad actors and steal data. It could be a 3rd party, it could be an inside job.

The way I look at the cloud vs on-premise is this: cloud companies do just that, host data. That is their business. Capital One on the other hand treats IT as a cost center. Which option do you think will do a better job overall? The cost center whose entire business model is based on costing as little as possible? Or a company that is dedicated to IT services and is focused on growing revenues and acquiring new customers?

If you want a good mechanic, do you go to the place where all they do is work on cars and nothing else? Or do you go to Sears where among 81,723 things they sell, they also have mechanics?

But nobody every thinks in those terms. It’s always OMG OMG OMG someone could steal data in the cloud, as if data has never been stolen on-premise before.

Prairies

Aug 12, 2019 at 11:21 am

To the point of conductor sales dropping due to less private users and more people on the cloud, the cloud data centers are massive. For each private server removed the cloud servers have to grow to handle the capacity. Not to the same level, but the data centers still have to expand as people switch.

I personally would always recommend a small in house data storage option for basic back up purposes, just incase a Myspace server reset happens. Or a data breach, depending on how sensitive the information is.

ZeroBrain

Aug 12, 2019 at 1:50 am

Amazon identifies, targets, and competes with software businesses using AWS that show high growth. They own the cloud, so that provides Amazon perfect information on who is growing and what feature sets clients want. Caveat emptor.

Gandalf

Aug 12, 2019 at 8:06 pm

Absolutely, which is a big reason Microsoft has been doing great Cloud business. Not having a business that competes with or could gain free useful data from your business‘s Cloud storage is one big selling point for Microsoft Cloud

The same warnings about Amazon Cloud also apply to Google Cloud

Michael Engel

Aug 11, 2019 at 9:27 am

Bubbles are great on the left hand side, because the left is a winner.
When they prick, switch from left to right, they tend to comeback to the base. They stay there for a long time, pumping muscles.
When the economy hit the breaks, consumers will no longer
be able to indulge in electronic and Boston Cream.

IslandTeal

Aug 11, 2019 at 9:48 am

Re Win 7….If you have done the right updates this year you be fine for quite awhile. Lack of Mr Softee support in not sending the Win7 boxes to the scrap heap. Thousands of businesses run on it.

Yes, one of my laptops is a windows 7 machine, now 9 years old, but still running. I’ll use it for the limited things that I use it for until it gives up its ghost.

nick kelly

Aug 11, 2019 at 11:05 am

When they first tried to kill 7 they had to back off for a while because a lot of banks were using it and they complained.

raxadian

Aug 11, 2019 at 11:05 am

Next year you will have to pay if you want Windows 7 updates.

So yes, that’s a reason to upgrade to Windows 10.

Unamused

Aug 11, 2019 at 1:30 pm

Aside from USB 3.1, Win10 has little in the way of technological advancement over Win7. It’s mostly a horribly refashioned user interface designed to look kewl on a small screen, which annoys users with larger screens no end, with abominated OS navigation. Under the bonnet it’s still mostly Win7, so MS had to coerce board and chipset mfgrs into making life difficult for Win7 users. Updated USB drivers, for example, were developed for Win7 for the newer chipsets but withdrawn and suppressed and are only available to the exceedingly clever, all in the effort to force the switch to Win10.

Other than that, Win10 is mostly a collection of marketing channels, e.g., Windows Shop, online, the operating-system-as-as-service model where you subscribe for things like MS Office and MS Media Player online instead of purchasing a licensed copy. Also things like Cortana, which everybody knows must be disabled immediately.

They decided that spyware, sir, should be free to all. That’s why they’re giving it away.

Win8, aka Win6, was largely a failure, and the number 9, as in Win9, is considered unlucky in Japan and therefore skipped, but each of those is another story and shall be told another time. If you must downgrade to Win10 go for the Enterprise Edition, as it is intended for businesses that don’t want their operational details regularly uploaded to MS, and be very careful about which updates you allow to be installed.

Linux users don’t have these problems. They have other problems but have mostly gotten used to the challenges.

Michael Engel

Aug 11, 2019 at 11:15 am

1) The Semiconductor index SOX had a great bull run for 10Y.
From Nov 2008(L) @ 167.55 til July 22 2019(H) @ 1,625.11.
With x2 verticals since Dec 24 2018, it made almost x10 more
2) On the way to the ultimate peak, SOX flying on low volatility tiny
candles, on top or air bubbles, on top of small gaps. The combine daily movements, including gaps, are much greater, especially on the way down.
When u boil water a lot of tiny bubbles emerge in the pot, until water evaporate and disappear.
3) During a mud slide, those little candles up in the air, lose their grip
and collapse very fast.
4) Read my lips : there is nothing more sad then a failed positive promise.
But that exactly what happened on the SOX chart, twice.
It indicate that the trend have changed, unless SOX next move is up and it will close above 1650.

bitterpill

Aug 11, 2019 at 12:05 pm

Pizza, robots & chips?

==> Even Little Caesars has gotten into the act, receiving a patent in March for its own pizza making robot. The chain also rolled out its first Pizza Portal, described as “the first heated, self-service mobile-order pickup station in the quick-service restaurant industry.” Customers download an app, prepay for their food on a mobile device, and receive a three-digit PIN or QR code. The customer can then go to the Pizza Portal at the store and input their PIN or scan their QR code to open a secured compartment in the portal, retrieving their pizza and skipping the line—no human interaction required.

nofreelunch

Aug 11, 2019 at 5:50 pm

I have found one of the few benefits of aging and needing reading glasses. I look at my phone less because its more trouble to read if you have to put on reading glasses.

‘But in a new report by DRAMeXchange, a division of TrendForce Corp., global DRAM revenue collapsed 42.5% to $14.8 billion in 2Q19 on a YoY basis.’

I guess there is not a lot of room in a phone for memory chips. I also suspect the guy who mentioned the Cloud has a point.

Sadasivan

Aug 12, 2019 at 6:36 am

Sorry,I repeated your post.

NotMe

Aug 11, 2019 at 7:41 pm

At the nexus of semiconductors and retail is Fry’s electronics which seems to be circling the drain to bankruptcy or total liquidation.

Anyone who has been to Fry’s recently can seen that the operation will soon cease. They have cleared the shelves of anything that cannot be returned to manufacturers, and replaced it with long term warehouse squatters like mattresses now on electronics shelves.

Fry’s demise is a combination of internet sales, competition for the high margin products now being sold by Apple, Microsoft, and cell phone vendors in their stores, 5G which will replace all networking save long haul, and the folding of the PC into smartphones.

Sales of electronics that were not phones didn’t exactly boom in the last decade. That is also an important reason

alex in San Jose AKA Digital Detroit

Aug 12, 2019 at 2:17 am

I’ve got the Fry’s where their HQ is, just up the street.

Last time I was there I had to leave empty-handed as they had no brown packing tape, no 99% isopropyl alcohol, none of the things I buy periodically. I managed to buy the last 99% isopropyl alcohol at the Safeway on San Carlos (the one downtown is gone) and when that runs out, I guess I’ll order that from Amazon too, the same place I’m getting my packing tape from now.

That Fry’s is coasting in sheer inertia, and it will be interesting watching it run down.

Zantetsu

Aug 13, 2019 at 11:26 pm

The demise of Fry’s makes me sad. They are the last vestige an older, quainter time in silicon valley, back before Google ruined it.

Sadasivan

Aug 11, 2019 at 8:19 pm

Surprisingly enough DRAM sales is also down as per Zerohedge.

Seen it all before, Bob

Aug 11, 2019 at 9:11 pm

IMHO, Everyone has been buying the latest and greatest Technology for the last 10 years.

What else do we need?

My iPhone is 6 years old and works great! My TVs are 5 and 2 years old.
Do I even have a wall big enough for the latest 100 inch TV? A 70″ TV seems good enough. :-)

There needs to be another transformative innovation more than slightly faster or slightly bigger to get the early adopters going again. Otherwise, sales will decrease due to the “Good Enough” syndrome.

That is when chip sales will take off again.

NBay

Aug 12, 2019 at 5:45 pm

That’s where Alexa and her GFs come in. The real on going long term reason for most electronic “improvements”, is that no bounce buttons and dials cost big $$$$, and can fail if made cheaply, just takes one, and wrecks entire gadget.

Software is cheaper.

Press and hold x while holding y and tapping z three times, then press….blah blah blee…..wonder how many are now sucked into cutsie verbal stuff? A lot I bet. We deserve what’s coming to us.

The reason is because you are measuring in sales revenue, and the price increase of memory (DRAM and NAND) was a large part of the revenue rise, and has been the major component of the fall.
The unusual thing was not the 25% drop, but rather the massive run up that preceded it.
To make the correlation with vehicle sales, consumer trends, you need to look at the UNIT base of semiconductor movement (WSTS data), not the headline revenues. The units picture (and the sectors other than memory) are nothing like as severe.